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GERMANY // Egypt yesterday signed an €8 billion (Dh33bn) contract with Siemens to increase power generation capacity by 50 per cent, which is expected to provide a boost to the economy.

The contract, which was signed in Berlin by the Egyptian president Abdel Fattah El Sisi, will add 16.4 gigawatts of capacity to the country’s grid, or enough electricity to power 16 million homes.

The binding agreement comes after an initial memorandum of understanding was announced in March at the Egypt the Future summit in Sharm El Sheikh.

The German group will supply three natural gas-fired combined cycle power plants, each with a capacity of 4.8GW.

Siemens will work with the Egyptian companies El Sewedy Electric and Orascom Construction on the three power plants located in Beni Suef, Burullus and New Capital.

The plants will add power to the grid in stages, with the first 4.4GW coming online by themiddle of 2017. The company said the entire project will take 38 months to complete once its finances have been ironed out. Siemens is looking to tap international and regional banks for funding.

Siemens began negotiating this deal at the beginning of March, and said financing was not a concern at this stage. “We have started working on operations and will work diligently to reach financial close,” said Joe Kaeser, the president and chief executive of Siemens.

In addition to the gas-fired plants, the German company will also build up to 12 wind farms in the Gulf of Suez and West Nile regions. About 600 turbines will be erected, with an installed capacity of 2GW.

Siemens will also construct a wind turbine blade manufacturing plant in Ain Sukhna, about 120 kilometres east of Cairo. It is expected to employ 1,000 people.

Egypt wants to double its power generation capacity by 2020 and has signed non-binding memorandums of understanding worth more than US$20bn.